Producer Prices Rise for 6 Consecutive Months in May... Agricultural Product Prices Decline

Producer Price Index for May Rises 0.1% MoM
Agricultural, Forestry, and Fishery Products Decline for Second Month
Coal and Petroleum Products Fall 3.5% Due to Oil Price Drop

Industrial city gas and services rose, causing the producer price index to increase by 0.1% last month. The rise was smaller than the previous month (0.3%) due to a decline in international oil prices. Prices of agricultural, forestry, and fishery products such as chamoe and cucumber continued to fall for the second consecutive month.

According to the 'May 2024 Producer Price Index (Provisional)' released by the Bank of Korea on the 21st, the producer price index in May rose 0.1% compared to the previous month, marking six consecutive months of increase. Compared to the same month last year, it rose 2.3%, continuing an upward trend for 10 consecutive months.

[Image source=Yonhap News]

Yoo Sung-wook, head of the Price Statistics Team at the Economic Statistics Bureau of the Bank of Korea, explained, "The reason for the reduced increase compared to the previous month is that manufactured goods remained flat due to the decline in international oil prices."

Specifically, agricultural, forestry, and fishery products declined, while electricity, gas, water, and waste services increased. Manufactured goods remained flat compared to the previous month.

Agricultural, forestry, and fishery products fell 4% compared to the previous month, mainly due to agricultural products, continuing a two-month decline. Fishery products rose 0.6%, but agricultural products (-7.5%) and livestock products (-1.3%) declined. Compared to the previous month, chamoe (-52.4%) and cucumber (-34.6%) dropped significantly.

Electricity, gas, water, and waste services rose 0.5% compared to the previous month, driven by industrial city gas (5.3%) and others.

Yoo Sung-wook, head of the Price Statistics Team at the Bank of Korea's Economic Statistics Bureau, said, "Industrial city gas is linked to natural gas, which lags oil prices by about 3 to 5 months," adding, "The 5.3% increase in natural gas prices contributed to the rise in electricity, gas, water, and waste services."

Services rose 0.5% compared to the previous month, with information and communication and broadcasting services (2.4%) and restaurant and accommodation services (0.2%) increasing. Among these, software development supply increased 6.3% compared to the previous year.

Yoo explained the significant rise in information and communication and broadcasting services, saying, "The biggest factor was the 9.5% increase in software development unit prices, centered on software development supply."

Manufactured goods remained flat compared to the previous month. Although primary metal products rose 1.3%, coal and petroleum products fell 3.5% due to the decline in international oil prices. Diesel fell 5.7% and naphtha 4.4% compared to the previous month.

By special classification, food products fell 2% compared to the previous month, and fresh food dropped 8%. Energy fell 0.7%, while IT rose 1.6% compared to the previous month. Except for food products and energy, other categories rose 0.3% compared to the previous month.

The domestic supply price index, which combines the producer price index and import price index, rose 0.2% compared to the previous month, with raw materials (1.2%), intermediate goods (0.1%), and final goods (0.1%) all increasing.

The total output price index, which combines the producer price index and export price index, fell 0.1% compared to the previous month as electricity, gas, water, and waste services (0.5%) and services (0.5%) rose, but agricultural, forestry, and fishery products (-4%) and manufactured goods (-0.2%) declined.